Five Consumer Durables Stocks Endorsed by Hedge Funds

It is important for a retail investor to diversify his/her investments. Even though a sector might seem high flying, but you never know when things turn sour. The recent fall of the healthcare sector is one such example. Keeping this in mind we have formulated a list of five consumer durable stocks that have gained significant attention from hedge funds and other smart money investors in our database.

In the eyes of most traders, hedge funds are assumed to be underperforming, old investment tools of the past. While there are more than 8,000 funds in operation at present, Insider Monkey looks at only the aristocrats of this group, around 730 funds. Contrary to popular belief, Insider Monkey’s research revealed that hedge funds underperformed in recent years because of their short positions as well as the huge fees that they charge, not because they are not good at picking stocks on the long side of their portfolios. Hedge funds did in fact manage to outperform the market on the long side of their portfolios. According to our backtests, the (see the details here).

#5 Jarden Corp (NYSE:JAH)

Investors with Long Positions (as of September 30): 42

Aggregate Value of Investors’ Holdings (as of September 30): $1.46 Billion

During the third quarter the total number of hedge funds holding Jarden Corp (NYSE:JAH) in their portfolios increased by nine while the aggregate value of their holdings inched down by 3.3%. The stock price fell by more than 6% during this period signalling that hedgies were generally bullish on the company. Betting on Jarden in the last quarter of 2015, seems to have been a good bet, since the stock rallied by nearly 17%.

Jarden Corp is expected to release its financial results for the last quarter in a couple of days, meanwhile, analysts expects it to deliver EPS of $1.19 on revenue of $2.67 billion, which would represent an annual revenue growth of nearly 10%. Among the funds we track, Larry Robbins‘ Glenview Capital is the largest stockholder of Jarden Corp (NYSE:JAH) as it owns about 4.03 million shares, according to its last 13F filing.

 

#4 KAR Auction Services Inc (NYSE:KAR)

Investors with Long Positions (as of September 30): 44

Aggregate Value of Investors’ Holdings (as of September 30): $1.24 Billion

Since the end of the third quarter of 2015, KAR Auction Services Inc (NYSE:KAR)’s stock has declined by around 8%. While the total number of hedge funds long the stock increased by two between July and September, the aggregate value of these holdings decreased by $158 million. Daniel S. Och‘s Oz Management holds more than 5.6 million shares of KAR Auction Services Inc (NYSE:KAR).

KAR Auction Services has not reported its results for the fourth quarter of 2015, but analysts are bullish on the stock, despite its 13% drop registered since the beginning of the year. Among others, Jefferies Group initiated coverage on the stock last month and set a ‘Buy’ rating with a $45.00 price target, close to the consensus among analysts and representing an upside potential of more than 40%.

#3 Graphic Packaging Holding Company (NYSE:GPK)

Investors with Long Positions (as of September 30): 44

Aggregate Value of Investors’ Holdings (as of September 30): $1.20 Billion

Over the past 12 months, Graphic Packaging Holding Company (NYSE:GPK)’s stock is down by more than 19%. Meanwhile, the number of funds bullish on the stock (among those we track) went up by one, but the aggregate value of their holdings inched down by 8% during the third quarter of 2015. Iridian Asset Management, led by David Cohen and Harold Levy, boosted its stake in Graphic Packaging Holding Company (NYSE:GPK) by 3% during the July-September period to 27.81 million shares.

For the fourth quarter of 2015, Graphic Packaging Holding Company reported adjusted EPS of $0.19 and revenue of $1.02 billion, mixed relative to the expectations. Analysts expected the company to post $0.17 in EPS, but the revenue estimates stood at $1.03 billion. For the full 2015, Graphic Packaging Holding Company delivered EPS of $0.70 on revenue worth $4.16 billion.

 

#2 B/E Aerospace Inc (NASDAQ:BEAV)

Investors with Long Positions (as of September 30): 46

Aggregate Value of Investors’ Holdings (as of September 30): $1.69 Billion

During the third quarter, the total number of hedge funds that were long B/E Aerospace Inc (NASDAQ:BEAV) declined by four, while the total value of their aggregate holdings slid by 2.2%. The stock price fell by almost 20% during this period. Keith Meister‘s Corvex Capital, hiked its stake in B/E Aerospace Inc (NASDAQ:BEAV) by 25% during the third quarter to 8.27 million shares.

In its last quarterly report, B/E Aerospace posted EPS of $0.81, which was in line with the consensus estimate, but the fourth-quarter revenue of $659.20 million, missed the expectations of $709.11 million. For the full 2015, B/E Aerospace delivered revenue of $2.73 billion, up by 5% on the year, but its EPS of $3.03 went up by more than 20% compared to 2014.

 

#1 Mohawk Industries, Inc. (NYSE:MHK)

Investors with Long Positions (as of September 30): 64

Aggregate Value of Investors’ Holdings (as of September 30): $2.87 Billion

Despite the total number of hedge funds holding shares Mohawk Industries, Inc. (NYSE:MHK) having increased by five during the third trimester, the aggregate value of holdings fell by 26%. Since the end of September, the stock is down by some 13%, mainly on the back of an 18% drop since the beginning of 2016. Renowned activist investor Dan Loeb‘s Third Point holds about 2.15 million shares of Mohawk Industries, Inc. (NYSE:MHK).

Currently, analysts expect Mohawk Industries to report EPS of $2.73 for the fourth quarter, on revenue of $2.06 billion, which represents slight growth over the year. For the full 2015, the consensus estimates include EPS of $10.11 on revenue of $8.13 billion.

Disclosure: None